In what bizarro world are you living where there is a competitive market for ISPs? 2 ISPs at best, via the municipality-granted local telecom and cable monopolies, is the norm for most of the US. Service does not improve because there is no competitive reason to improve it outside a tiny subset of markets. Services that require physical infrastructure over a wide area, such as power, water, and telecom service tend to result in natural monopolies as a rule.

The limited competition between consumer ISPs in the current landscape isn't providing value by any meaningful assessment. Internet service is functionally a commodity: so long as it's fast enough with consistent uptime it's functionally identical no matter who's providing it. As much as Comcast would like to believe otherwise, consumers largely aren't choosing them for their shitty Netflix knockoff or their free email inbox, they're choosing them because they're probably faster than AT&T DSL. In most markets they're "providing value" by deferring infrastructure upgrades and leveraging dark patterns to generate additional revenue (lol at the common scam-level prices for router rental) to increase profits for their shareholders. Commercial consumer ISPs do not have the best interests of residents in the service areas as a priority.

If nothing else, allowing municipalities to run fiber is in favor of far better competition than the status quo. I sincerely doubt that competence is a major concern with the simple practice of laying infrastructure in a trench (if it is, it doesn't bode well for your water and sewage systems, and that's probably a far more pressing concern), and that's the main barrier to entry for competition. /Running an ISP/, an entity that handles routing and uplink agreements with peers for its customers, is not profoundly heavy on infrastructure cost: you can start your own with leased access, a couple blokes in a shed, some routing and switching gear, and someone who can negotiate a transit contract or two. /Laying a shitton of last-mile fiber across public land/ is infrastructure intensive. The incumbent providers just happen to do both.

You could easily have a municipality provide only the fiber or have it provide both the physical infrastructure and run an ISP service atop it while leasing out line bandwidth to other ISPs. A single ISP can't really monopolize last-mile bandwidth--its usage is a function of the last mile users, not who offers service over it. Fundamentally though, choosing whether subsidize an entire ISP including infrastructure, subsidizing infrastructure alone and renting it, or subsidizing nothing should be the choice of citizens through their government. There's no god-given right that telecom companies have to that market, but they're often able to secure it by bribing a few state reps to listen to their stories about the SCARY PERILS OF MUNICIPAL INFRASTRUCTURE and THE GREAT THREAT TO THE TOTALLY REAL VIBRANT ISP COMPETIIVE LANDSCAPE and vote on something most constituents aren't aware of for a continued stream of campaign contributions.